Long-term trends suggest gold and related exchange traded funds could head lower as the U.S. dollar continues to appreciate.
According to Chris Kimble of Kimble Charting Solutions, the Swiss franc and gold both peaked around the same time in 2011 and have been stuck in a downtrend ever since.
Now, Kimble argues that the long-term charts reveal that the franc and gold both dipped below their 10-year support lines and both touched the underside of resistance at about the same time Additionally, the assets are breaking below prior monthly closing lows.
The CurrencyShares Swiss Franc Trust (NYSEArca: FXF) has declined 7.3% over the past month and decreased 12.5% over the past year. The U.S. dollar is now trading close to parity with the Swiss franc.
Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) fell 6.0% over the past month and dipped 13.7% over the past year, with gold futures sitting around $1,160 per ounce.
Consequently, as the long-term trend breaks down, Kimble believes the two markets could continue to slide over the short-term.
With the U.S. dollar on the rise, other market observers are also anticipating further weakness in the gold market as the precious metal becomes more expensive for foreign buyers.